UBS Q3 2022 results

UBS publishes its latest results

FABRICE COFFRINI | AFP | Getty Images

UBS on Tuesday reported net profit of $1.7 billion for the third quarter of this year, slightly above analysts’ expectations, with the Swiss bank citing a difficult environment.

Analysts had expected net profit of $1.64 billion, according to Refinitiv data. UBS reported net income of $2.3 billion a year ago.

The Swiss lender had missed expectations in the last quarter when it posted a net profit of $2.108 billion. The bank said at the time that the second quarter had been “one of hardest times for investors over the past 10 years” due to high inflation, war in Ukraine and strict Covid-19 policies in Asia.

UBS said Tuesday that those factors remained on investors’ minds in the third quarter.

“The macroeconomic and geopolitical environment has become increasingly complex. Customers remain concerned about continued high inflation, high energy prices, the war in Ukraine and the residual effects of the pandemic,” said UBS CEO Ralph Hamers said in a statement.

Speaking to CNBC’s Geoff Cutmore, however, Hamers said there were very strong flows into the business during the quarter, with net new assets generating $17 billion in fees.

Other highlights of the quarter include:

  • Revenue reached $8.3 billion, compared to $9.1 billion a year ago.
  • Operating expenses fell to $5.9 billion from $6.2 billion a year ago.
  • The CET 1 capital ratio, a measure of bank solvency, reached 14.4% against 14.9% a year ago.

Its investment banking division saw revenue decline 19% as weaker performance in equity derivatives, cash equities and financing income was offset by foreign exchange income. The Global Wealth Management division also saw lower revenue, down 4% year-on-year.

However, revenues from Personal and Corporate Banking increased over the same period thanks to more favorable rates from the Swiss National Bank.

Hamers noted on Tuesday that clients on the wealth side were looking for alternative investments and cash, and he predicted that activity on the institutional side of his trading unit would remain weak in the fourth quarter.

The Chinese Xi

UBS is aiming to improve its Asia-Pacific business and CEO Hamers said he sees “opportunities for growth” in China.

“The confirmation of [China President] Xi for another term is on the one hand essentially confirmation of consistency going forward, so some of the policies he has proposed over the last year will most likely be continued,” Hamers said.

He added that the Swiss bank looks at China “by virtue of its demographics and certain dimensions of the economy”. “We think over time it’s a very attractive place, so it’s a strategic place,” he added.

Elsewhere, Hamers expects “difficult” times for Europe given the energy crisis and the ongoing war in Ukraine.

“Europe will have a tough time, a tough winter although it has its reserves,” he said, adding that the Swiss bank expects the region to slip into recession.

UBS shares are down about 8% so far this year.

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